Business economics 4
© Nathalie Wittendorp
,Chapter
15
, Financial accounting
15.1 – stakeholders and disclosure requirements
The enhancement of financial statements is known as creative accounting. The auditor has to
function as a ‘watchdog’ against creative accounting. In most countries, governments have it
necessary to oblige legal entities to disclose information with regard to the financial performance.
This is called disclosure requirement. The publication is by means of the annual report, which
comprises 3 parts:
The financial statements
The report by the managing board
Other information
In the European Union, the countries can decide to impose stricter information on large companies.
Disclosure requirements are applicable to:
Public limited companies
Limited liability companies
Cooperatives
Mutual insurance companies
Associations and foundations, generating an annual revenue of at least 4.4 million
15.2 – financial statements
Financial statements is the first part. Financial statements comprise the balance sheet + the income
statement and the notes to these accounts.
Stock exchange listed companies
All companies listed on the stock exchange, are obliged to apply the International financial report
standards, compiled by the international accounting standards board: compiled by IASB.
The obligations are to adhere to the IFRS only apply to the consolidation financial statement. These
are the financial accounts which provide a picture of the financial position of the total group, namely
the holding company and subsidiaries. The separate financial statements of the holding and NOT the
subsidiaries can be drawn up in accordance with national legislation.
Not listed companies
The companies who are not listed on the stock exchange must adhere to the legislative rules of the
country. Netherlands: legislation can be found in Book 2, Title 9, of the Civil Code. Moreover, they can
chose whether or not to adhere to the strict IFRS rules.
Financial reporting principles
Waar moet de financial statement aan voldoen?
Drawing up the financial statements in a relevant and reliable manner
Costs and sales revenues should be assigned to the correct period
© Nathalie Wittendorp
,Chapter
15
, Financial accounting
15.1 – stakeholders and disclosure requirements
The enhancement of financial statements is known as creative accounting. The auditor has to
function as a ‘watchdog’ against creative accounting. In most countries, governments have it
necessary to oblige legal entities to disclose information with regard to the financial performance.
This is called disclosure requirement. The publication is by means of the annual report, which
comprises 3 parts:
The financial statements
The report by the managing board
Other information
In the European Union, the countries can decide to impose stricter information on large companies.
Disclosure requirements are applicable to:
Public limited companies
Limited liability companies
Cooperatives
Mutual insurance companies
Associations and foundations, generating an annual revenue of at least 4.4 million
15.2 – financial statements
Financial statements is the first part. Financial statements comprise the balance sheet + the income
statement and the notes to these accounts.
Stock exchange listed companies
All companies listed on the stock exchange, are obliged to apply the International financial report
standards, compiled by the international accounting standards board: compiled by IASB.
The obligations are to adhere to the IFRS only apply to the consolidation financial statement. These
are the financial accounts which provide a picture of the financial position of the total group, namely
the holding company and subsidiaries. The separate financial statements of the holding and NOT the
subsidiaries can be drawn up in accordance with national legislation.
Not listed companies
The companies who are not listed on the stock exchange must adhere to the legislative rules of the
country. Netherlands: legislation can be found in Book 2, Title 9, of the Civil Code. Moreover, they can
chose whether or not to adhere to the strict IFRS rules.
Financial reporting principles
Waar moet de financial statement aan voldoen?
Drawing up the financial statements in a relevant and reliable manner
Costs and sales revenues should be assigned to the correct period
